Despite investor concerns about impending indigenisation legislation in Zimbabwe, investment in the troubled nation’s mining sector is starting to pick up, notes Imara, the pan-African investment group.

Botswana-registered Imara reports regularly to international equity investors on Zimbabwean developments as the country’s assets feature in its flagship Imara African Opportunities Fund and its African Resources Fund. It also manages and markets an investment fund with dedicated focus on Zimbabwe, the Imara Zimbabwe Fund.

The latest report from this fund links a softening of political rhetoric on indigenisation with recent announcements from mining companies about new capital commitments.

The report acknowledges that to date there have been no changes to indigenisation regulations, but a measure of reassurance was provided by the recent speech by President Robert Mugabe at the annual congress of Zimbabwe’s Chamber of Mines.

Mugabe told mining company executives his government had “no intention to expropriate the mining industry”.

Grant Flanagan, manager of the Imara Zimbabwe Fund, pointed out: “The speech demonstrated an understanding of the need to refine the (indigenisation) legislation, the long-term nature of mining developments and the acceptance of empowerment credits as part of (indigenisation) requirements. It is hoped that the legislative reforms being undertaken will clarify all these points and ensure that investor confidence increases.”

He added that the view that indigenisation legislation may be softened was supported by recent announcements about capital commitments by significant players in the mining industry.

Flanagan noted: “RioTinto has announced that it has begun work on a US$300 million expansion programme for its Murowa diamond mine. There has also been mention of Zimplats committing a further $500 million for a platinum smelter in the country on top of its stage-two expansion of $445 million.

“Both of these announcements have been made without any change to the investment environment so maybe they know something we don’t?’